Correlation Between Federated Mdt and Federated Institutional

Can any of the company-specific risk be diversified away by investing in both Federated Mdt and Federated Institutional at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Federated Mdt and Federated Institutional into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Federated Mdt Balanced and Federated Institutional High, you can compare the effects of market volatilities on Federated Mdt and Federated Institutional and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Federated Mdt with a short position of Federated Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Mdt and Federated Institutional.

Diversification Opportunities for Federated Mdt and Federated Institutional

0.62

Correlation Coefficient

Federated Mdt  Federated Institutional

Poor diversification

The 3 months correlation between Federated and Federated is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Federated Mdt Balanced and Federated Institutional High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Institutional and Federated Mdt is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Federated Mdt Balanced are associated (or correlated) with Federated Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Institutional has no effect on the direction of Federated Mdt i.e., Federated Mdt and Federated Institutional go up and down completely randomly.

Pair Corralation between Federated Mdt and Federated Institutional

Assuming the 90 days horizon Federated Mdt Balanced is expected to generate 3.84 times more return on investment than Federated Institutional. However, Federated Mdt is 3.84 times more volatile than Federated Institutional High. It trades about 0.06 of its potential returns per unit of risk. Federated Institutional High is currently generating about 0.15 per unit of risk. If you would invest  2,002  in Federated Mdt Balanced on September 14, 2024 and sell it today you would earn a total of  218.00  from holding Federated Mdt Balanced or generate 10.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Federated Mdt Balanced  vs.  Federated Institutional High

Federated Mdt Balanced

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Mdt Balanced are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Federated Mdt is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Institutional

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Institutional High are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Federated Institutional is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federated Mdt and Federated Institutional

The main advantage of trading using opposite Federated Mdt and Federated Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Mdt position performs unexpectedly, Federated Institutional can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Federated Institutional will offset losses from the drop in Federated Institutional's long position.

The idea behind Federated Mdt Balanced and Federated Institutional High pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.